Finding 1142437 (2024-003)

Procurement and Suspension and Debarment Finding Number: 2024-003 Assistance Listing Number and Title COVID-19 Coronavirus State and Local Fiscal Recovery Funds – AL #21.027 Federal Award Identification Number / Year: 2024 Federal Agency: U.S. Department of Treasury Compliance Requirement: Procurement and Suspension and Debarment Pass-Through Entity: Ohio Facilities Construction Commission Repeat Finding from Prior Audit? No Noncompliance and Material Weakness 2 CFR 1000.10 gives regulatory effect to the U.S. Department of Treasury for 2 CFR § 200.318 through 200.327 which describe specific procedures non-Federal entities must follow when entering into procurement transactions using Federal funds. 2 CFR 200.324(a) requires a cost or price analysis be performed for every procurement transaction, including contract modifications, in excess of the simplified acquisition threshold. The method and degree of analysis conducted depend on the facts surrounding the particular procurement transaction. 2 CFR 200.324(c) states that the “cost plus a percentage of cost” and “percentage of construction costs” methods of contracting must not be used. Additionally, District Policy: PROCUREMENT - FEDERAL GRANTS/FUNDS, states that the District shall perform a cost or price analysis in connection with every procurement action in excess of $250,000, including contract modifications. A cost analysis generally means evaluating the separate cost elements that make up the total price, while a price analysis means evaluating the total price, without looking at the individual cost elements. The method and degree of analysis are dependent on the facts surrounding the particular procurement situation; however, the District shall come to an independent estimate prior to receiving bids or proposals. The District did not have the proper internal controls in place to perform a cost or price analysis for procurements in excess of $250,000. During testing of Ohio K-12 School Safety Grant – Public School Districts, we noted the District used the sealed bid procurement to award a project in excess of $250,000, and there was no evidence the District performed a cost or price analysis. Due to the deficient internal control structure, the required cost or price analysis was not completed for the procurement action covering a transaction made in Fiscal Year 2024. Failing to have the appropriate controls in place may result in rewarding contracts to vendors whose bids or proposals are not the most responsive and responsible. The District should perform a cost or price analysis for all procurement actions in excess of $250,000.